PLAN THE DOWNSIDE

Risk Management

A clear setup includes a defined invalidation point and a plan for what happens if the market moves against the idea.

Before entry

  • Establish the stop-loss before entering.
  • Assess stop distance and position size relative to account risk limits.
  • Determine the intended take-profit level.
  • Evaluate the planned risk/reward relationship.
  • Identify the conditions that invalidate the setup.

During and after

  • Avoid impulsive entries and excessive trading.
  • Adjust stops only according to relevant price levels and a predefined plan.
  • Account for slippage and the possibility that stop execution differs from the planned price.
  • Review strategy alignment, execution, management, and outcome after closing.